If the idea of working from home is appealing, but you don't know where to
begin, here is a step-by-step guide.

STEP #1 DECIDE WHAT PART OF THE HOUSE TO USE

Select an area away from family activity. The perfect space is a separate
room (or perhaps the garage), but any area will do, if it can hold all the
business supplies and equipment, and also provide enough work space for desks,
tables, or counters.

STEP #2 DETERMINE HOW MUCH TIME YOU CAN SPEND ON THE
BUSINESS

Many people start a home business on a part-time basis while raising children
or working outside the home. Others start full-time when family and finances
allow. However you begin, figure out how may hours per week you can devote to
the business Make a weekly chart of your activities, examine it, and determine
where the business fits. Don't assume you have time and find out later you
don't.

STEP #3 DECIDE ON THE TYPE OF BUSINESS

Make a list of things you like to do, your work and volunteer experience, and
items you own that can be used in a business. Look over this line-up, and using
ideas from it, list possible businesses to start. Eliminate any business that
isn't appealing or doesn't fill a need people have.

For ideas on different types of businesses, consult the end of this article.
Other ideas can be found in the source material listed at the end of this
article.

STEP #4 CHOOSE A LEGAL FORM

The three basic legal forms are sole proprietorship, partnership, and
corporation. The most common is the sole proprietorship. As its name implies, a
sole proprietorship is owned by one individual. It is the oldest form of
business, the easiest to start, and the least complicated to dissolve. Here are
some of the advantages of this business form:

1. You own all the profits 2. Your business is easy and cheap to organize.
You don't need any government approval, although you may be required to carry a
city, state or county license. Your only other obligation is to notify the
Internal revenue Service (IRS) for the purposes of sales tax. 3. You're the boss
4. You enjoy certain tax savings. You must pay regular individual taxes on your
income, property, and payroll, but these are not levied as special taxes, as
with a corporation. You will also have to pay sales tax which you have received
from your customers. 5. Greater personal incentive and satisfaction. Since you
have your investment to lose if your business is not successful, you should be
more willing to put time, thought, and energy into the business. And when your
business is successful, you enjoy maximum sense of accomplishment since you know
its success was dependent upon your decisions about your management ability
alone.

For more information about this and other forms of business, send for the
U.S. Small Business Administration (SBA) Publication MP25. Selecting the Legal
Structure for Your Business (50 cents). It outlines the advantages and
disadvantages of each legal type of structure. If after reading it you are still
uncertain what form of the business should take, consult an attorney.

STEP #5 DETERMINE WHERE THE MONEY WILL COME FROM

There are three ways to finance start-up costs: use your own money, obtain a
loan, or find investors. If possible, it is better to start small, use your
savings, and not worry about repaying a debt. also keep in mind that since you
are a home-based, chances of qualifying for a loan or finding investors are slim
until the success of your idea is proven.

STEP #6 GATHER INFORMATION

Spend a few weeks researching home-based businesses. A library or bookstore
can provide numerous books on business basics, and on the specific type of
business that interest you. Homemade Money by Barbara Brabee (see sources) is an
excellent book to start with.

If you are considering a computer business, get in touch with the association
of Electronics; Cottagers, P.O. Box 1738, Davis, CA 95617-1738. To keep informed
of what is happening in home business world, contact National Home Business
report, P.O. Box 2137, Naperville, IL 60566, for subscription information; and
Mothers Home Business Network, P.O. Box 423, East Meadow, NY 11554 (send SASE
for free information).

STEP #7 CHECK ON ZONING RESTRICTIONS

Find out how your property is zoned, the call City Hall and ask what
regulations apply to home businesses in that zone. Also, if you rent or live in
a condominium, check the lease or homeowner's association rules to be certain a
home business is allowed.

Generally, if you do not annoy your neighbors with excess noise, odors, and
traffic, you will not be deterred from running a business at home. The neighbors
may not even be aware of the business, but it is necessary to know exactly what
you can and can't do before you start. This is important should any problems or
questions arise later.

STEP #8 PICK A BUSINESS NAME AND REGISTER IT

If the business you choose is different form your name, file an assumed (or
fictitious) name certificate with the county. You are notified if another
business already has that name, so you can select a new one.

Do this before investing in expensive stationery and brochures. It costs only
a few dollars to file, and it protects the business name from being used by
someone else in the county.

STEP #9 WRITE A BUSINESS PLAN

A good business plan clarifies your ideas and establishes a plan of action. A
good business plan should include a description of what you are selling, your
background and qualifications, who the prospective customers are and where they
can be found, what is needed to build the business, how you plan to promote, and
how much money is need for start-up costs.

STEP #10 GET AN IDENTIFYING NUMBER

If you are the sole proprietor of the business and have no employees, you may
either use your Social Security number or an Employee Identification Number (EIN)
as the business number on official forms. If you have employees, or the business
is set up as a partnership or corporation, you must obtain an EIN. To do this,
complete IRS Form SS-4 (Application for Employer Identification Number) and file
it with the nearest IRS Center.

STEP #11 OBTAIN A SALES TAX PERMIT

If the product or service you sell is taxable, you need a state sales tax
permit. Call the local tax agency, explain the type of business you have and
what you sell, and ask if you need to collect sales tax. If you do, they will
send you the necessary information and forms to complete. You also use this tax
number when your purchase items for resale.

STEP #12 OBTAIN LICENSES & PERMITS

It's very important not to overlook any necessary license or permit. For
example, some cities and counties require a general business license, and most
have special laws regarding the preparation and sale of food.

Call City Hall to find out what is need for your particular business. In
addition, Chamber of Commerce provide information on city, county and state
licenses and permits.

STEP #13 SELECT BUSINESS CARDS, STATIONERY, BROCHURES

Spend time on the color, design and paper for these items. They make a
definite impression-good or bad- on the people who receive them. If you are not
certain what is most suitable and effective, consult a graphics designer or a
creative printer whose work you like.

STEP #14 OPEN A BUSINESS CHECKING ACCOUNT

Call several banks to find out what services they offer, and what minimum
balance, if any, must be maintained to avoid paying a service charge. Also ask
about credit card if you plan to offer this convenience to your customers. Bank
fees can be significant, so shop around for the best deal.

If your personal checking account is with a credit union, see if it can also
provide a separate business account. when you open your account, you may need to
show the assumed name certificate and business license.

Finally, investigate obtaining a credit card in the business's name. If this
is not possible, set aside a personal credit card to use for business expenses.

STEP #15 SET UP RECORD-KEEPING SYSTEMS

Put together a simple and effective bookkeeping system with an 8 1/2 x
11" three-ring binder, columnar pad sheets and twelve pocket dividers from
the office supply store. For each month, set up columnar sheets for income and
expenses. Use a pocket divider for each month's receipts, bank statement,
deposit tickets, and canceled checks.

In addition, an automobile log for business mileage, and filing system for
correspondence, invoices, supplier catalogs, client records, etc. are two other
useful tools.

For more information on record-keeping, see IRS publication #583, Information
for Business taxpayers.

STEP #16 CHECK IRS REQUIREMENTS

If you comply with basic IRS guidelines, you can deduct a percentage of
normal household expenses (mortgage, interest, taxes, insurance, utilities,
repairs, etc.) as a business expense. see the box accompanying this article and,
for more detailed information, IRS publication #587, Business Use of the Home.

Also become familiar with these IRS forms: Schedule SE (compensation of
Social Security Self-Employment Tax) and Schedule 1040 ES (estimated Tax for
Individuals). Depending on circumstances, you may have to file them.

STEP #17 OUTFIT THE BUSINESS

Make a list of everything needed to start the business, but before you buy
anything, look around the house for things you already own that are usable.

When you are ready to start purchasing, check the classified ads and garage
sales. Both are good, inexpensive sources for office furniture, typewriters,
computers, answering machines, etc. But only what is absolutely necessary for
start-up, and wait until the business is off the ground to get the extras.

STEP #18 DECIDE ON TELEPHONE REQUIREMENTS

Call the telephone company to find out the cost of a business phone in your
area. If you cannot afford a separate business line, investigate the telephone
company's regulations on using your personal phone in a business. It may be
possible to do this if you follow certain guidelines. Keep a record of long
distance business calls as they are a deductible expense. Finally, consider the
benefits of an answering machine to catch calls when you are out.

STEP #19 CHECK OUT THE POST OFFICE & UPS

Using a post office box as the business address down plays the fact you are
home-based. It also prevents customers from dropping in at all hours.

While looking into box rental, ask for information on the various postal
rates, particularly bulk rate, if you plan to do large or specialized mailings.
If you mail many packages, check out United Parcel Service (UPS), as it is less
expensive than the Post Office.

STEP #20 PURCHASE THE NECESSARY INSURANCE

Check with your homeowners insurance agent about a rider for your existing
policy or the need for a separate business policy. Also make sure you have
adequate personal and product liability coverage. Shop around, as each company
has different rules regarding home businesses

To save money on medical insurance, join an association and participate in
their group plan. One such body is The National association for the
Self-Employed: they can be reached at 800-527-5504.

STEP #21 ORGANIZE THE HOUSE & YOURSELF

To have more time for business, organize and simplify household routines.
Start by holding a garage sale to get rid of unnecessary possessions. Next, have
a family conference and divide household duties, making sure each person does
his or her part. The, set up a planning notebook to keep track of appointments,
things to do, calls to make, errands to run, shopping, etc. Finally, set up a
work schedule so you won't get sidetracked by TV, neighbor's visits, snacking,
and telephone calls.

Creating and operating a home business is a wonderful and rewarding
challenge. The satisfaction is not only in the money earned, but in doing what
makes you happy.